US Tax Guide for Business Owners Living in Germany

Germany is a popular destination for American business owners, drawn by its economy, central European location, and business infrastructure. Germany's worldwide income taxation and the US-Germany tax treaty create complex filing questions for business owners. FileAbroad helps American business owners in Germany navigate FEIE, FBAR, and the cross-border questions that complicate filing.

Key Tax Issues for Business Owners in Germany

• German tax residency: If you have a domicile (Wohnsitz) or habitual abode (gewöhnlicher Aufenthalt) in Germany, you are a German tax resident.
• German corporation tax: German companies pay corporation tax (Körperschaftsteuer) on profits (15% plus solidarity surcharge). Trade tax (Gewerbesteuer) may also apply.
• US taxation of foreign corporations: If you own a German company, you may have US reporting obligations (Form 5471) and potential GILTI/Subpart F income.
• Freiberufler vs Gewerbe: Freelancers in liberal professions (Freiberufler) are exempt from trade tax. Trade businesses (Gewerbe) owe Gewerbesteuer.
• Totalization agreement: US-Germany totalization agreement prevents double social security taxation.
• FEIE limitations: FEIE only applies to earned income, not dividends or corporate profits.

FEIE vs FTC for Business Owners in Germany

FEIE applies to earned income (salary from your company). FTC applies to German tax paid on that income.

For corporate profits (dividends, GILTI), FEIE does not apply. FTC may be available for German corporation tax paid.

FBAR & Reporting for Business Owners in Germany

German business bank accounts are reportable on FBAR if you have a financial interest or signature authority. Form 5471 is required for US shareholders of foreign corporations.

Common Mistakes Business Owners Make in Germany

1. Not filing Form 5471 — Required for US shareholders of foreign corporations.
2. Not understanding GILTI — Global Intangible Low-Taxed Income may apply to your German company.
3. Assuming German corporation tax eliminates US tax — It doesn't. US tax still applies, with FTC as relief.
4. Not reporting German business bank accounts on FBAR — Business accounts are reportable.
5. Not understanding Freiberufler vs Gewerbe — This classification significantly affects your tax.

When to Get Professional Help

You should consider professional help if you own a foreign company, have foreign accounts exceeding $10,000, or have complex income situations. Business owners with foreign entities need specialized advice beyond individual tax preparation.

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FileAbroad explains U.S. federal tax and U.S. international information-reporting consequences of documented foreign facts. It does not provide foreign-country legal or tax representation, valuation opinions, banking or remittance advice, or advice on what a foreign authority will accept.

Scope statement reviewed 2026-08-30 · FileAbroad product/content owner